For instance, it might be converted into a for-profit company, with the city retaining a portion of the shares, or into a cooperative (as many utilities, particularly those in rural communities, are incorporated). In fact, it could even sell off its shares in times of need to finance other municipal needs.
If it's converted into a cooperative, it would become 100% member-owned, and any profits would not go to outside shareholders, as with a publicly traded company, but would instead go back to its member-owners in the form of lower costs.
The more I think about it, the more I think this is the way to go for other cities of a similar size. Clearly, Comcast/Verizon weren't very interested in laying down their own fiber there if the city beat them to it. And once a utility company (in this case, publicly owned) has an effective monopoly in a certain area, it's going to be hard for others to introduce competing infrastructure. BUT, I would think that the ability to then sell the publicly owned utility would have significant value to the municipalities.
Corporations exist to provide a good to society, and if a public utility would do that job better, then we should obviously be free to choose that model. It's not my job as a citizen to subsidize for-profit enterprise for the sole reason that they are for-profit enterprise!
The numbers are so tremendously bend in favor of "socialized medicine" but it is basically communism and hence, the private model is better.
There are also a lot of numbers against "socialized medicine".
Also, "socialized medicine" does not entail getting rid of the private sector, just regulating it. For instance, my GP runs a private practice, the only limitation is that she cannot set the price of an appointment. And if she was a hard-core free-market proponent of some kind, she could set her own prices freely, the only snag being that insurances would not cover her visits. Also, there is an argument to be made that doctors are veblen goods and that free price levels would not be optimal.
The numbers I'm referring can be wide in scope. For example, the economics of providing such a socialized healthcare system are difficult to surmise, however there is a lot of data which may indicate it's not economical at a federal level (maybe at a state level, sure).
Also the numbers of citizens with interest in such a program is low, to date only 8 million US citizens have signed up for the federal/state exchanges, out of around 360 million US citizens; about 2% of the country. Only 16 of 50 states have built local Exchanges, the rest deferring to the Federal Exchange for various reasons including but not limited to the economics behind building such a portal, maintainability of such a portal, and some flat-out refused out of political, moral, or economical principal.
The current program provides almost none of the goals it set out to accomplish.
With the current program, it is still very possible to get a horrible disease such as Cancer, and leave the hospital with $60K+ in bills. The current program made almost no changes to the Pharmaceutical industry, which charges in excess of $300 per pill for some treatments when the cost-to-manufacture is known to be significant multiples less. The current program does not "provide" healthcare to anyone, it merely made it illegal to not have healthcare (with fines imposed if you refuse). The current program provides a way to get access to healthcare (via the government) if you have no other access, however it's arguably not affordable at all (the current program is estimated to cost a family of 4 around $4,000 USD per year -- and it's likely a family of 4 without healthcare might not have it because they could not afford it, nor can afford an extra $4,000 a year... but now it's illegal to not afford it).
I digress. This debate can easily turn into a flame war, and is off-topic for a thread discussing a city implementing municipal high-speed internet.
Fully socialized health insurance makes a lot more sense than what we have now. I can't think of a single benefit of our "free market" system of insurance providers.
I mean, I could be a lot more healthy if I could afford that gym membership, but I'm busy buying all this beer and junk food instead. I'd have to reduce how much beer and junk food I purchase in order to afford a gym membership. The government is buying a lot of "beer and junk food" programs that make it un-economical to afford such an vast and expansive program in current-day (even though I agree healthcare expenditures are likely a much better choice to fund rather than some of the frivolous and redundant government programs).
Also, we'd need to somehow figure out how to not de-incentivize hospitals from hiring top-tier medical staff, equipment and facilities. There is a risk that if hospitals become more standardized (by means of standardized payments, etc), that it could reduce income revenue, and therefore the overall quality the hospital can afford (hospitals are businesses too). Currently, in socialized healthcare countries, the "everyday joe's" get the local healthcare treatments, while the country's elites fly out-of-country (mostly into the US) for treatments -- possibly because they perceive the treatments to be, or they are more superior to what they can get back at home (idk honestly, this should be studied more).
That's not to say we can't do it... only that our present situation may not allow it until a future time.
I think the coop model for getting fiber to the home is awesome. Nobody benefits more from laying last-mile fiber than the homeowner. But forcing neighbors to invest in the project if they're happy with the state of the art isn't really fair IMO.
I've actually been thinking quite a bit of how a provisioning and operations consultancy that would help eg. home owners associations and the like build and run a fiber network and essentially be their own local ISP. Does such a thing exist?
I should note, these fibre services are a free installation for residential use and many businesses. Monthly charges are the same price as ADSL2+ internet is here.
A dark fiber, however, is a perfectly neutral medium and it's trivial to measure it's quality so you can set up meaningful SLAs (basically, like water or electricity - it's either there or not, and if it's not, it's the providers problem. OK, not quite, but it's a heck lot more clean cut than deciding whether your internet connection is too slow, why and whose responsible).
So you essentially take out a mortgage on your fraction of the dark fiber coop (my consultancy could conceivably facilitate this financing - maybe there's some local businesses or wealthy citizens that you like to underwrite the loans, but they'd still need the infrastructure to facilitate the loans and secure the collateral). You own the bit of infrastructure that only serves your house outright (if you're in a dense area, that't not much, if you have a two mile driveway, it's more) and 1/nth of the shared infrastructure, including the carrier neutral termination room. When someone buys in later, they pay for any direct cost of connecting them, and their 1/nth is distributed evenly between the existing members. If this is a community effort, you can save a lot of money digging ditches yourself (the consultancy will provide instructions on how to properly secure the cables in the ditch) and by placing the termination room in a town hall, community center, church or local business annex - ideally close to existing backbone cable runs. Obviously, bullet proof leases and contracts for access to this room would need to be in place, that's part of what I imagine the consultancy would help with.
Once you have the infrastructure in place, you need to get a provider to set up shop in the termination room. It would make a lot of sense for the consultancy to also be an ISP for this purpose. Maybe the cost of setting up could be incorporated in the initial capital of the coop, maybe the ISP will front it on back of signing maybe 1-2 year contracts for service (which is separate from and on top of the cost of the fiber), maybe it can just provide the service on the expectation of being able to do business - that would likely depend on how remote the community it. Installing optical transceivers at each end of the fiber is the responsibility of the customer and their desired ISP.
It never got more than a couple of thousand subscribers out of the 1.3million people that it passed. It turned out that the large national ISPs would rather use their own infrastructure or wait for BT (the national telecom) to roll out their wholesale solution than have to have a special case for support, installs etc for such a small proportion of their userbase.
It got shut down and is now pretty much rotting in the ground.
Of course, internet service is a utility and so should be underwritten by the state, just like other critical infrastructure with benefits shared by all, so the point about mispricing risk--while valid--is a critique of government-run projects generally, but no more applicable here than in the building of bridges and roads.
The equipment to do it (Ubiquiti makes some gear that appears quite nice) is getting cheaper by the year.
The private ISP's argument is a perfect flip-flop and doesn't really deserve addressing.
1: A coop generally can't have outside ownership.
2: Before Comcast can buy them, someone would need to sell it. It's not clear why they'd want to sell to Comcast.
3: If they did sell, they then (by definition) have the value of a community-wide network in their pockets. They could use that to build another community-wide network to compete with Comcast (then Comcast could buy that, but...)
But more fundamentally, if Comcast had a lot of money lying around for stuff like this, they could just invest it in becoming a properly good ISP that people would actually want to be customers of.
And why shouldn't it have "a natural advantage over for-profit companies"?
Were "for-profit companies" granted a guarantee to have advantage over everything else somewhere?
So what if it does? I do not think that this should be of overriding concern to us. The for-profit companies are not the only stakeholders here.
Like Opelika Power in Alabama: http://www.opelikapower.com/.
For my startup broadbandnow.com we've been emailing every mayor in the US offering free statistics about coverage, fiber penetration, etc in their local area along with how they can bring faster speeds to their area.
So far the campaign is going well, we've emailed almost 300 mayors, but after countless phone calls and email changes with city officials, the disheartening reality is that most cities have 2 options to bring faster interent to their area.
1 - Install their own network
2 - Beg incumbent providers to increase their speed / coverage.
I think it's still a few years out, but I'm forecasting a huge slew of crowd funded or community backed providers entering the market to fill the gaps in coverage. (Our goal is to be a part of that movement)
1- This is all based on what I recall from conversations with EPB higher-ups when I spent a day chatting with them for a school event.
also, if you're really interested, New America Foundation recently published a good study on public broadband options http://www.newamerica.net/sites/newamerica.net/files/policyd...
Limited bandwidth is a really, really constraining bottleneck on innovation. It's a crime that Comcast et al get away with limiting innovation on the Internet to support their monopolies.
This is kind of a bullshit comparison. The bonds they are talking about are bonds issued by the city of Chattanooga and backed by the revenue of the local electric utility. That isn't something a telco can do. And they are muni bonds so they receive favorable tax treatment (the interest payments on the bond are tax exempt at the federal and state level) which is reflected through lower interest rates (cheaper borrowing costs) for the issuer. So to say that, hey, the local electric utility did a thing that any old telco could do is not realistic. Also the part about receiving stimulus money is really contrived. The utility directly received DOE (Dept of Energy) moneys in a way that none of the big telcos did.
I'm not try to be a cheerleader for the big telcos, but I think there are valid financial reasons cities shouldn't fund these kinds of projects this way.
The inverse is not true, however. Last year, EPB's electrical division saw a shortfall in revenue due to electricity usage being lower than anticipated. This could have actually resulted in a rate hike to EPB electrical customers, but because EPB Fiber Optics was already profitable, they were able to use fiber revenue to avert an electrical rate increase.
Fully staffed, CMUA has an impressive roster of professionals: experienced lobbyists, regulatory and communications specialists, and legal professionals – all experts in their fields with extensive knowledge of every aspect of California energy and water policies.
It’s illegal because Tennessee prohibits municipals from delivering both electric and internet service in any “area where a privately-held cable television operator is providing cable service.”
Full disclosure: we're www.gridcure.com in the smart grid track of the most recent cohort of the program (Demo Day is on the 29th. Ahh!), and can't speak more highly of the startup community in Chattanooga and the quality of work that goes on here. EPB's been a terrific pilot partner for us.
And there's great beer everywhere, three climbing gyms walking distance from my desk, and dirt-cheap office space.
This saves not only the construction costs, but also allow speedy installation as the time needed to get digging/building permits falls away. It's dead fast to wire an entire city area with FTTH if you already have a network of pipes for electrical wiring.
Well, tied for fastest. It only goes up to 1Gbps. Meanwhile, Japan has at least 2Gbps (and I think I saw 4Gbps somewhere, but don't have a source).
The fact that you can get a 1 Gbps link to the internet is amazing. This is pretty much the fastest LAN connection you can get. The difference between LAN and WAN will be gone before too long (other than latency).
Not yet. But the cost of 10Gbe is dropping quite rapidly.
(They seem to cost in the $500 range these days. I'd pay $500 for a 10Gbps link to the Internet. What would I do? I have no idea.)
If startups had a Chamber of Commerce equivalent, as Chattanooga's Enoch Elwall has been proposing, our community could effectively push back in a unified political voice through a local organization.
I've argued this for years, and many of the people who are now pro-net neutrality, in years past would argue that there needed to be these monopolies, because otherwise the infrastructure wouldn't be built, or poor people wouldn't be able to afford it, etc.
In fact, EPB is probably a local monopoly- many power companies are, though that is less the case today than in decades past.
ISPs and Telecoms are amongst the industries that lobby governments the most - they are actively fighting against Free Market, so there's nothing about this which is "flipping this paradigm on its head".
It seems people want to have one model or the other ALWAYS. But it is not that easy. We don't want firefighters being a private business because a house would burn before you can pay for the service. Or police: the service is typically needed where those with least ability to pay live.
However, it also does not follow that government should enter, say, into the haircut business or the fashion business. But the simple "threat" that it would be possible should send the message to private participants that service at reasonable cost is expected in some markets.
To the extent that access to information and communication is a necessary requirement in the Republic, then it seems to me that it is the government role to ensure this.
EDIT: I wonder at what level though. It seems that if the service is necessary, local initiatives have the least chance to be successful. Maybe this is one of those projects where states have a better chance.
Also, no company wants taxpayer-funded alternatives to their product. Its impossible to effectively compete with a public entity that can tap tax revenue. That angle doesn't really add anything to the article.
1. That public internet would suck because all public projects suck (and cite examples).
2. That private companies wouldn't be able to compete with public ones.
They cannot both be true. If the public offering was as bad as you claim, private companies could compete (e.g. on quality).
So which is it? Either public companies suck and therefore private companies would be able to compete (by virtue of them sucking less presumably) OR public companies don't suck and the private companies wouldn't be able to compete.
Your whole post reads like one of those propaganda pieces put out by the far right, interest groups, or think tanks. Just generic "all public services are terrible" then switch it up into "it is unfair that companies have to compete with taxes!"
One could take the logic in your post and use it to literally argue that all public entities ever should be closed and privatised. Even things like cops, fire services, and so on could be hit by that logic. There's no limits.
The current telecom oligopoly is bad, but a government-run monopoly is the one thing that could be worse. Now, public money going to build last-mile fiber which is then leased to competing ISPs to create a functioning marketplace (neither corporate oligopoly nor government monopoly, but a true economics-textbook 'free market') sounds like something that could be a good use of public money & power.
Unless those private companies are legally prohibited from competing, or are prohibited from practically competing by things like red tape or fees for constructing infrastructure.
Just as with the private sector, you'll be able to find public initiatives that aren't reaching their goals, or are outright failures. Should they not be permitted to compete against the private sector when the private sector chooses not to serve a certain unprofitable market segment? If you're that good at providing services, why as a private business are you worried about competing with an "incompetent" (as you may argue) public sector initiative?
Full Disclosure: I fully support municipal broadband, and want a stake driven through Comcast's heart.
For varying definitions of 'very well.' Public services are good at delivering a minimum level of service to everyone. Everyone will get water and sewer service. That water might not be particularly clean, and the sewers might dump untreated sewage into the environment, but everyone will get it. The problem for you in this narrative is that you're the yuppie who would be happy to have a higher water bill in order to have cleaner rivers: you're not going to get your way.
Chattanooga was able to piggy-back this on the fiber network put in place for smart grid. What happens in 10 years when that network becomes obsolete? Your neighbors will have to vote to fund upgrades. Will they do that? 60% of people who have access to FiOS do not subscribe. When those same people vote on whether to raise their utility bill to fund upgrades, do you think you'll be happy with the result?
You sound unhappy with Comcast, but the fact is that they pump enormous amounts of capital into their network, while municipalities are famous for letting their infrastructure rot.
I'm not opposed to public services. The question is: will municipal internet be more like NYC's transit system, or more like the ones everywhere else?
 The U.S. Society for Civil Engineers estimates we're $3.6 trillion behind on infrastructure maintenance. http://www.infrastructurereportcard.org
Who he worked for previously doesn't really change the fact that he has pointed out repeatedly that Google Fiber is getting breaks to only build out to rich neighborhoods vs. Comcast having to build out to an entire city, even sections of town which will lose them money.
Correct me if I'm wrong, but Comcast's profitability is over $1 billion a year.
Should my electric company be able to profit at that level? Because they're much more reliable than Comcast, and they're a regulated monopoly that needs to report to the PUC (Public Utilities Commission).
Have we determined yet if Internet access is a utility such as phone service, electricity, water, and natural gas service? If it is, isn't it time last-mile delivery is regulated as such? (Which leaves Comcast in a precarious position as a last-mile provider)
Also, I'm not unhappy with Comcast because of my service. I'm unhappy because of their efforts to prevent municipal broadband. They are the Koch Brothers of the Internet, and are attempting to squeeze whomever they can for access only they provide in a great deal of markets to a tool that is the foundation of the 21st century.
TL;DR Regulate last mile delivery as a utility, politely ask rent-seekers like Comcast to leave.
I don't think the "internet = electricity" analogies are very good. The regulated part of the electric monopoly (e.g. ComEd in Illinois) just has to maintain wires built decades ago. If internet infrastructure were the sort of thing we could bury in the ground for 50 years and forget about, that might work. But stuff that was state of the art in the 1990's is obsolete now. There is no public infrastructure that turns over that fast.
You didn't respond to my point about politicizing investment decisions. Utility investment decisions are intensely political, and voters don't care about better technology, they just want cheap rates. Its a huge battle for most utilities to raise the money they need to upgrade the network, or even just maintain it properly. If you think Comcast is slow to upgrade its network, what do you make of utility companies that are operating coal plants that are literally a century old? The fact that public utility regulation has left us $3.6 trillion underfunded is totally ignored by proponents of municipal internet service.
Electric utilities cover large areas. You use Excelon as an example, who delivers my power in Northern Illinois. As you say "..[they] just has to maintain wires built decades ago." It's not just wires. Its transmission facilities all the way from 700kVa down to the 120V step down in your neighborhood, even to your service entrance.
Internet access is no different. You trench fiber in the ground, you drop equipment cabinets on the curb, and you pull your plant to your CO for interconnection to your routing/switching gear (although sometimes this gear is distributed across the plant instead of at the CO; depends on size/network topology).
My municipality or coop not upgrading fast enough or providing the service I want? I argue I have more leverage in that case as a share/stakeholder. With Comcast, they're out for the shareholder, not me.
As I've said elsewhere, almost all other utilities have functioned well in a regulatory, profit-restricted environment. Why not last-mile packet delivery?
As for utilities having functioned well: you keep ignoring the $3.6 trillion U.S. Society of Civil Engineers number.
Not only do I believe I have a better shot as a voter, I believe I'll have more control over the service I receive.
"In fact, Comcast and TWC’s Internet service businesses were the only two businesses in the United States to score below a 60 on the ACSI’s 100-point scale. What’s most amazing is that both Comcast and TWC have even lower customer satisfaction ratings than United Airlines, which has a notoriously bad reputation in an industry that, due in part to government security requirements, is known for delivering a miserable experience."
Again, the proof is in the pudding. We have underinvested in our infrastructure to the tune of $3.6 trillion. Our bridges are crumbling, our transit systems haven't been expanded in decades, our sewer systems are polluting the environment because nobody wants to spend the money to bring them in compliance with environmental laws, and yet you posit that public utilities work "very well" and assert that they should get involved in an area where technology moves 10x as fast as the areas in which they already lag behind. I just don't see how you get from point A to point B here.
Let's not forget the big elephant in the room too. The states haee no money. When Illinois is deciding between defaulting on its debt and giving a haircut to public employee pensions, where do you think spending money keeping up with telecom infrastructure upgrades is going to fall in the list of priorities?
It's funny that you use this as a point of comparison. The NYC subway system began as three competing private companies.
Long story short: They went broke, and were acquired by the city in 1940 (and then later by the state, which now has authority over the MTA).
While they were originally constructed as private subway systems, I firmly believe that it would be impossible for NYC to function the way it does now if its public transit system were privately run.
That's not to say I'm a fan of the way the MTA is regulated. I follow this issue closely and have a lot of opinions on the matter. There are a number of ways in which the state government cripples it. But it's still significantly better than it would be if the Interborough Rapid Transit were still running the numbered lines.
Not quite as simple as that, the city had been deeply involved for decades prior to them finally taken over completely, and the city effort was itself deeply indebted.
Anyway, I'm pretty sure the GP emphasized the MTA as a (rare) example of public infrastructure that's actually run to the high standard we'd want our internet infrastructure to be run at.
I wouldn't have much confidence if my place of residence (Oakland CA) set up muni broadband, for example, although I'd like to be proved wrong. Large parts of the city government are painfully inefficient.
The scale of the problem isn't clear, but I would argue that the economic calculation problem is certainly an inherent problem with publicly funded services.
Agreed. This is solved with complete transparency and independent oversight.
Do they really though? Road infrastructure (especially bridges) is widely recognized to be really bad in the USA. It's hard to say how well police work without comparing it to something else, but just based on the US prison population I would say that police don't work well. Fire and maintenance services might work reasonably well, but I bet both are shockingly expensive.
This is due to Republicans in Congress blocking an increase on the gas tax, currently at ~18 cents/gallon of gas since 1993.
> It's hard to say how well police work without comparing it to something else, but just based on the US prison population I would say that police don't work well.
I'm not a huge fan of police myself, but I believe this problem to be with laws enacted by legislative bodies. I believe you'll see less arrests as drug arrests drop due to decriminalization/legalization of recreational drugs across the US.
> Fire and maintenance services might work reasonably well, but I bet both are shockingly extremely expensive.
Citation? My property tax bill for my municipality (~75K people) shows public safety costing ~$48 million/year and highways and streets cost ~$14 million/year. I don't believe those costs to be out of line for the amount of people covered.
Is it, though? Only 60% - 65% of the gas tax is spent on roads and highways  . Not to mention (possibly ultimately justified, but still relevant) drivers of extra cost like the Davis-Bacon Act.
Your demagoguery does not hold up to the fact that Democrats recently held a majority in both houses of congress.
Your argument fails to take into account that, due to the filibuster, legislation can be blocked by one party (with no support from the other party) so long as the opposing party doesn't have both a majority in the House and a filibuster-proof supermajority in the Senate.
If it's not such a good idea then perhaps it was only done as a publicity stunt, and that would explain why it hasn't come up again.
I don't know that I care much one way or the other. But saying "Democrats haven't voted it down" is actually different than "Democrats have made it a priority"
But the Dems do get campaign contributions from Oil & Gas companies. Only at 20% of the rate of folks in the GOP but it's not as though it's a 99/1 split.
Maybe so, but that's not the point. I'm just challenging the claim that government (which includes Republicans) effectively performs those tasks.
A semi-rural department with three fire engines, ambulance, brush trucks, serving an area of 7,000 people and approximately ~1,000 calls a year does so with expenditure of ~$1M for those 7,000 residents.
What's the breakdown of your calls? Car accidents? Health problems?
There is a lot of talk in the thread about public vs private - regardless of ideology - EPB is an incredibly run public utility (as least as a customer)
As far as business users go, they could drop their prices a little, but overall - they are top notch.
Meanwhile, in much of the developed world, people are shocked when a train is a minute late.
Take public schools, for example. It is often said that public schools are "underfunded." Yet Washington DC schools spend almost 3x the national average per student and has abysmal results.
Also, there are better ways to look at how to fund these. For example, having municipalities own the wiring only, and let ISPs pay to have access to the homes (similar to how telecom or power systems work now, e.g. different charge for distribution). I would love more choices of providers, honestly, and with fiber, there are better options for managing traffic at the neighborhood and local level.
 http://www.norwichpublicutilities.com and http://www.nytimes.com/2011/11/04/business/the-troubling-con... (the section re: Norwich is about halfway down)
Saw this elsewhere today. Speedtest result from Chattanooga:
Every private corporation that ever took a tax abatement, subsidy, or other government incentive is also "taxpayer funded."
Wow. Just wow. You do know that Atlanta privatized its water, right? The private company, United Water, failed to deliver on it's contract. The city took over water duties again after finding fraudulent billing and lower water quality delivered by United Water. Since the city took over in 2004, they've reduced sewage overflows by 97-99%.
That's a really terrible example to use for your argument.
You can view it as simply as, developing a single distribution network and subscribing to Comcast/AT&T/etc at your discretion over that common distribution network saves everyone money, because the city has only one distribution network rather than several cable networks, DSL, satellite, etc. It additionally could encourage competition among service providers, as incumbents would not need to develop their own distribution network.
Also, the existing infrastructure was built with tax money and heavy tax breaks as well. Local governments won't really be at an advantage for having those levers to pull.
However, let's ask that same question about "privately" owned Internet. To have an actual market, there must be more than a single provider. Which means the overwhelming majority of places have been stuck at DSL for over a decade!
If the solution comes from the private sector, the public sector, or rainbow unicorn fairies is a secondary concern. But the current system is clearly not the answer, which is why I can't read about the home Internet options available to people in most of the world (with a few other exceptions like Canada and Australia) without nearly breaking down and crying.
That might not prove true for a lot of entities though, but EPB is great. They're likely one of the few well run power companies though, I've heard lots of horror stories elsewhere.
For example: the USPS, having started as a government agency, has the weight of the law behind it. No one can mess with your (physical) mail.
Similarly, I can imagine a scenario where traffic on a municipal-owned fiber network could enjoy some protections that a private operator won't.
As an example, ATT is more than happy to bend over and go above and beyond the law to help the feds, hoping for favors in return.